CENTRAL CLEARING Consultation regulations and rules 9 June 2015
Product s cope • Ministerial determination: – Interest rate derivatives in Australian dollars and 4 global currencies • ASIC rules: – “swaps” that are “fixed to floating swaps”, “basis swaps”, “forward rate agreements” or “overnight index swaps” – excludes swaps with multi-currency, optionality, contingent notional amount
Entity s cope • Regulations: – Australian clearing entity (ACE) • ADI/AFSL; A$100b+ gross notional outstanding – Foreign clearing entity (FCE) • ADI/AFSL; A$100b+ gross notional outstanding • Exempt foreign financial service providers; A$100b+ – Responsible entities/trustees (‘representative capacity’): ASIC rules
Entity s cope • ASIC rules: – Australian clearing entities: • Clearing threshold • Includes entity acting in representative capacity for a trust or fund established in Australia – Foreign clearing entities: • Clearing threshold • Includes entity acting in representative capacity for a trust or fund established outside of Australia
Clearing requirement • Regulations: – Transaction scope: – FIADs: CFTC/SEC swap dealers
Clearing requirement • “Clear through” a clearing facility – Clearing transaction novated to a clearing facility; – Counterparties to clearing transaction have substantially no rights or obligations under the cleared derivative contract • Accommodates direct and indirect clearing
Eligible CCPs • Regulations and ASIC Rules: – Licensed CS facilities – Prescribed CCPs: • 4 to date • Others may be prescribed under final regulations • ASIC may prescribe additional CCPs
Other • ASIC Rules: – Notifications to ASIC – Notification to counterparties – Exemptions: • Intra group transactions • Multilateral compression • No backloading (exception: extended maturity)
Next steps • Treasury consultation: 26 June 2015 • ASIC consultation: 10 July 2015 • Final regulations and rules made
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